Paradise Papers: Courtesy FCPA Blog

Shruti Shah: Paradise Papers show need to close beneficial owner loopholes

By Shruti J. Shah | Monday, November 6, 2017 at 11:08AM

Image courtesy of the ICIJ
The massive leak of 13.4 million files, dubbed the “Paradise Papers,” highlights loopholes that exist in the global financial system. The documents also show how easy it is for tax evaders, money launderers, and senior public officials to utilize anonymous companies to hide their identities, their potential conflicts of interest, and their business deals.

The documents were leaked from offshore law firm Appleby, from corporate services provider Asiaciti Trust, and from company registries in 19 secrecy jurisdictions.

The Paradise Papers were revealed on Sunday (November 5) by the International Consortium of Investigative Journalists (ICIJ).

While shell companies have legitimate uses, their opacity makes them a favorite tool for tax evaders, money launderers, corrupt public officials and other criminals. The leaks also shine a light on the role of offshore tax havens.

The United Kingdom has led the way by publishing the world’s first fully open register of beneficial ownership, but it needs to do more to tackle abuses by its Overseas Territories and Crown Dependencies, many of which are well known tax havens.

Unfortunately, it is not just Bermuda, Panama, and other known tax havens that provide vehicles for tax evaders and criminals to launder their illicit wealth. In every state in the United States, one can incorporate a legal entity without having to disclose who controls the entity or derives economic benefits from it.

It’s imperative that company service providers are required to conduct due diligence and screenings of their clients so that they are not unwittingly opening shell companies for tax evaders or corrupt public officials.

Claudia J. Dumas, the head of the Coalition for Integrity said, “The Paradise Papers leaks show how important it is for all jurisdictions, including the U.S., to collect beneficial ownership information upon company formation.”


Shruti Shah is a contributing editor of the FCPA Blog. She’s the Vice President of Programs and Operations at Coalition for Integrity (formerly Transparency International-USA). She can be contacted here.

via Shruti Shah: Paradise Papers show need to close beneficial owner loopholes – The FCPA Blog – The FCPA Blog


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